Setting up as freelance accountant

[my own boss finally!]

Hi all
Im new to this forum (I hope you like my user name, it feels really good to use it even if it is a bit silly)...
Im a chartered accountant and have been working in industry for the last few years. I basically decided that one day i had had enough of working for stupid, arrogant, lazy, boring, moronic cretins and quit (saying that felt great, as did quitting, there really are some vile people out there!).
I am currently talking to a few local firms of CAs and friends in the industry about doing some freelance work. I dont want to work full time and just want to pick up a few bits and pieces. I am thinking my best option is to set up a limited company and take that route. Does anyone have any thoughts? In terms of IR35 considerations I intend to have maybe 3 or 4 regular firms I work with.
Thanks, Liz.

[Zeno]

So without putting too fine a point on it you are effectively planning to swap one bunch of stupid, arrogant, lazy, boring, moronic cretins for three or four more?

Have you any experience of practice?

[my own boss finally!]

very droll....not exactly re the swap. Im going to do some stats, management accounts and audit for a few acquaintances I have worked with before, on a casual basis and potentially other recommended clients, so more a consultancy basis than being someone's tick/bash slave.

yes plenty of experience of practice (qualified therein), both big 4 and smaller firms, and also done my stint in industry. dont particularly like any of it and the longer term plan is quite a drastic career change, this is more of an interim measure to generate an income in the least painful way possible until that time....

so back to my question, how would you go about setting up given my aims?

[Zeno]

Have you considered the need for a practicing certificate? I will be honest that I don't know how this interacts with a consultancy relationship but I would imagine ICAEW would think there is a fee in it for them so seem you need one.

[Big Pete]

Hi and welcome

Good luck in your own Business as well ..:)

[my own boss finally!]

Have you considered the need for a practicing certificate? I will be honest that I don't know how this interacts with a consultancy relationship but I would imagine ICAEW would think there is a fee in it for them so seem you need one.

from what i can gather you are ok on the practicing certificate as long as you phrase the engagement letter correctly...it is a pain though; to be honest if it wasnt for that issue i would have just set up on my own totally and picked up my own work. i've actually considered converting to CIMA just because it's way easier to get a practicing certifcate and there isn't the need to work for a gozillion years in practice!

it should all be so easy shouldnt it, but it never is!!! your thoughts and advice are much appreciated though

[Zeno]

from what i can gather you are ok on the practicing certificate as long as you phrase the engagement letter correctly...it is a pain though; to be honest if it wasnt for that issue i would have just set up on my own totally and picked up my own work. i've actually considered converting to CIMA just because it's way easier to get a practicing certifcate and there isn't the need to work for a gozillion years in practice!

it should all be so easy shouldnt it, but it never is!!! your thoughts and advice are much appreciated though

I am ICAS myself and I believe that I would till require a PC in your situation but perhaps ICAEW are different.

What exactly are the services you plan to offer? Do you have a specialism?

[Alba Transcription]

Sorry, I can't answer your question but would like to say this: as a sole trader who might need an accountant one day, your attitude immediately ensures your name is crossed off the list.

You are right that being in business on your own account isn't easy but courtesy to, and respect for, those with whom you have done, or intend to do, business with goes a very long way IMHO.

[my own boss finally!]

I am ICAS myself and I believe that I would till require a PC in your situation but perhaps ICAEW are different.

What exactly are the services you plan to offer? Do you have a specialism?

Hi again - it's a bit of a grey area from what i can gather! on the one hand i have been told that if you phrase your engagement letter to allude to 'working under direction' you are ok - ie you don't sign anything off yourself, bit like being trainee in practice, but then theres the points you are making....its a bit like one of those situations involving personal tax where you know the HMRC are the only ones who know the correct answer but you dont want to alert them to your situation in case the answer isnt what you want to hear!!! cheers for your advice!

oh i forgot the services bit; well, most of my experience is in financial reporting and iv done a fair bit of FP&A in larger business, so probably mainly pulling together stat accounts for firms when their staff are too busy, and mopping up excess management accounts....can do vat returns etc, it depends who im working with really, my experience has been quite broad, id like to do a variety to be honest, keep it interesting and fresh!

[my own boss finally!]

Sorry, I can't answer your question but would like to say this: as a sole trader who might need an accountant one day, your attitude immediately ensures your name is crossed off the list.

You are right that being in business on your own account isn't easy but courtesy to, and respect for, those with whom you have done, or intend to do, business with goes a very long way IMHO.

Hi there - I apologise if I caused offence, I guess im a bit outspoken and silly and have just walked out of a job working for a large multinational where i worked extremely hard for very long hours and the credit for my hard work and unflappable attitude went to the 9 to 5 plod that was my boss....
i have total respect for all of those brave enough to start out business on their own, which is precisely why i have exited the rat race and the rats in it and decided I would prefer to work with smaller local businesses where people actually care about what they are doing. actually let me re-phrase that, I have respect for all people until they prove they are not worthy of it! ;)

[Zeno]

Hi again - it's a bit of a grey area from what i can gather! on the one hand i have been told that if you phrase your engagement letter to allude to 'working under direction' you are ok - ie you don't sign anything off yourself, bit like being trainee in practice, but then theres the points you are making....its a bit like one of those situations involving personal tax where you know the HMRC are the only ones who know the correct answer but you dont want to alert them to your situation in case the answer isnt what you want to hear!!! cheers for your advice!

oh i forgot the services bit; well, most of my experience is in financial reporting and iv done a fair bit of FP&A in larger business, so probably mainly pulling together stat accounts for firms when their staff are too busy, and mopping up excess management accounts....can do vat returns etc, it depends who im working with really, my experience has been quite broad, id like to do a variety to be honest, keep it interesting and fresh!

I will be honest with you here and say that I would not be particulary keen to engage your services under you current proposed set up (nothing personal).

Part of the reason I would pay for a fully qualified CA is the assurance I would receive regarding the standard of your work. I am sure that your work will be of the right quality of course and I am not implying that it ever would not be but simply due to the terms of the arrangement I couldn't be seen to rely on it.

I would urge you to reconsider and enquire about getting your PC. It may not be as difficult as you think and would leave you in a far better position.

[my own boss finally!]

I will be honest with you here and say that I would not be particulary keen to engage your services under you current proposed set up (nothing personal).

Part of the reason I would pay for a fully qualified CA is the assurance I would receive regarding the standard of your work. I am sure that your work will be of the right quality of course and I am not implying that it ever would not be but simply due to the terms of the arrangement I couldn't be seen to rely on it.

I would urge you to reconsider and enquire about getting your PC. It may not be as difficult as you think and would leave you in a far better position.

thanks for the frank and honest response - these are things i need to hear, i'm definitely going to think again about how to do this, very helpful advice :)

[Maslins]

Getting a PC isn't that hard with ICAEW, just need 2 years post qual experience and to have a PII quote. PII'll likely cost you <£200/year, and the PC is the same, plus you can typically get the first 2 years PC for free with ICAEW if you're a one person practice.

If you anticipate working mainly for friends/ex colleagues then the need to prove yourself and get all the correct paperwork in place I guess is less important...but like you suggest in your original post, the more you make your engagement letter with the bigger practices sound like you're under their control, the more it sounds like you'll be under IR35.

Have you considered simply trying to get part time jobs with a few of them? If a few firms pay you for 1 day/week each it'd probably even be more tax efficient (as likely to pay virtually zero NICs). I know on the face of it you say you want out of employment and to start on your own, but plunging further into the detail it would appear perhaps you're not so sure. Running your own business involves dealing with all the admin crap on top of the client work.

[my own boss finally!]

Getting a PC isn't that hard with ICAEW, just need 2 years post qual experience and to have a PII quote. PII'll likely cost you <£200/year, and the PC is the same, plus you can typically get the first 2 years PC for free with ICAEW if you're a one person practice.

If you anticipate working mainly for friends/ex colleagues then the need to prove yourself and get all the correct paperwork in place I guess is less important...but like you suggest in your original post, the more you make your engagement letter with the bigger practices sound like you're under their control, the more it sounds like you'll be under IR35.

Have you considered simply trying to get part time jobs with a few of them? If a few firms pay you for 1 day/week each it'd probably even be more tax efficient (as likely to pay virtually zero NICs). I know on the face of it you say you want out of employment and to start on your own, but plunging further into the detail it would appear perhaps you're not so sure. Running your own business involves dealing with all the admin crap on top of the client work.

Hi there

Actually the going through the payroll option might work out ok under the circs and at least i know im covered for everything....

on the practicing cert side, do those 2 years post qual have to be in practice - i was under the impression they did....sadly my post qual experience in audit is about a day! thankyou

[DFL]

Hi Liz
IR35 won't be a problem by the sounds of it, you won't be tied to one or two clients, you will be in business on your own account, and presume that their will be no mutual obligations.
Good luck with it - although your opening post may have been worded better, I remember well the feeling of euphoria when decision was made to escape the rat race.

[Williams lester]

Hi Liz
IR35 won't be a problem by the sounds of it, you won't be tied to one or two clients, you will be in business on your own account, and presume that their will be no mutual obligations.
Good luck with it - although your opening post may have been worded better, I remember well the feeling of euphoria when decision was made to escape the rat race.

I disagree! From post #9 the OP is intending to have a letter of engagement saying they are 'working under direction', surely this will then fail the IR35 test, as they will in effect be 'managed' as if they were an employee?

[DFL]

I disagree!

The clause in the engagement letter is a smart one. It indicates that there is 'direction' rather than 'control' or 'supervision'. OP will be directed in what duties to perform leaving her free to carry out the work as she sees fit.

Obviously don't know the full facts so only an opnion but on what is known then I think that this would fall outside of IR35.

[Williams lester]

I disagree!

The clause in the engagement letter is a smart one. It indicates that there is 'direction' rather than 'control' or 'supervision'. OP will be directed in what duties to perform leaving her free to carry out the work as she sees fit.

Obviously don't know the full facts so only an opnion but on what is known then I think that this would fall outside of IR35.

I would have thought the clause would be enough to encourage HMRC to pursue it further...the main test then could be a substitution clause (or lack of!).

[DFL]

The three main clauses are the substittion clause, control clause, and mutuality of obligation clause. If any one of these three are satisfied then out of IR35 and all other pointers ignored.

In this case:

Sub clause can't be satisifed, control should be satisfied, mutuality don't know on information provided.

[Williams lester]

I am still undecided as to whether the control clause is satisfied in this case, and as I said in an earlier post it will give HMRC encouragement to pursue it further....whether they are correct is not necessarily the main issue, it could be expensive either way.

[DFL]

The Revenue could pursue it all they like! They wouldn't get very far and would be wasting more money than they already have on this ridiculous piece of legislation.
They are massively understaffed and short of money at the moment - expect to see an increase of more targetted VAT inspections where their success and revenue is huge. They are hardly likely to pursue what in this instance is cleary a business and not a series of disguised employments. Working with four clients (already) would indicate that there can be no 'master/servant' relationship with the firms she is working for and if the control and obligation clause is inserted in the enagement letters (and put into practice) then in the unlikely event of an enquiry the Revenue would have to move on very quickly.

[Williams lester]

But since when has HMRC wasting time and money on pointless enquiries ever stopped them from doing so? I agree the legislation is ridiculous, but, there we are...we have it and have to work around it.

[DFL]

But since when has HMRC wasting time and money on pointless enquiries ever stopped them from doing so?

Fair point! In the past yes, but they are being more pragmatic with their limited resources at the moment (and rightly so).

I agree with you that it's here and we have to work with it but do really think that the OP in this instance would have any problem with IR35? Based on the limited information provided already then its clearly a business, and if there was any grey areas then the terms of each engagement could be clearly stated and acted on, to ensure that it's not an issue.

I think that with IR35, so much scaremongering goes on that a lot of people do the Revenue's job for them. As advisers, I just feel that we should be encouraging people to start businesses and if IR35 is a potential area of concern to let them know the options of setting up so that it isn't a problem. It is perfectly acceptable to set up engagements to avoid IR35 so long as the terms of those engagements are carried out and not a paper sham.

[Williams lester]

I think that with IR35, so much scaremongering goes on that a lot of people do the Revenue's job for them. As advisers, I just feel that we should be encouraging people to start businesses and if IR35 is a potential area of concern to let them know the options of setting up so that it isn't a problem. It is perfectly acceptable to set up engagements to avoid IR35 so long as the terms of those engagements are carried out and not a paper sham.

Agreed on that.

[David Griffiths]

I think that with IR35, so much scaremongering goes on that a lot of people do the Revenue's job for them.

Not to mention their tactics when they do take a case on. They jump in with both feet with calculation of the alleged tax due going back over six years - usually over £100k. They give 30 days to reply. When they reply to your letter they take two months, then give you 30 days, and increase the calculations. The pressure heaped on the victim is huge.

This happened to one of our clients, who was covered via the PCG and defended by Accountax - probably the best in the business. The client said that the pressure was awful, then after about six letters the Revenue just gave up.

That's for a company director who actually paid himself over £35k as salary (his decision) but still got done over. And some of the Revenue's other tactics in dealing with the case were highly questionable as well.

If it goes to Court, the Revenue lose almost every time, but I bet loads of people are bullied into submission before it gets that far

[housefull]

I accept with information: both big 4 and smaller firms, and also done my stint in industry. dont particularly like any of it and the longer term plan is quite a drastic career change, this is more of an interim measure to generate an income in the least painful way possible until that time....

[elainec100@cheapaccounting]

If you want to call yourself an ACA and offer accounting services then IMO you will need a PC.

Why work for a qualification that you are putting at risk by not having it - madness. Agree with Chris that getting one is pretty straight forward.

You also need to make sure you are up to date with ML and get PII cover.

[yorkshirejames]

Hi there - I apologise if I caused offence, I guess im a bit outspoken and silly and have just walked out of a job working for a large multinational where i worked extremely hard for very long hours and the credit for my hard work and unflappable attitude went to the 9 to 5 plod that was my boss....
i have total respect for all of those brave enough to start out business on their own, which is precisely why i have exited the rat race and the rats in it and decided I would prefer to work with smaller local businesses where people actually care about what they are doing. actually let me re-phrase that, I have respect for all people until they prove they are not worthy of it! ;)

You sound like I should know you. Just wondering whether this is the same multinational as I was able to exit....

[yorkshirejames]

If you want to call yourself an ACA and offer accounting services then IMO you will need a PC.

Why work for a qualification that you are putting at risk by not having it - madness. Agree with Chris that getting one is pretty straight forward.

You also need to make sure you are up to date with ML and get PII cover.

Surely she can always use her letters to refer to her name?

I mean I could surely refer to myself as "James Surname ACMA - Windowcleaner" and theres nothing wrong with that?

[Zeno]

Surely she can always use her letters to refer to her name?

I mean I could surely refer to myself as "James Surname ACMA - Windowcleaner" and theres nothing wrong with that?

I do not believe that this would be seen as holding yourself out to be in practice but if you offered any sort of accounting services then I would imagine it would be (chamois or calculator?). The rules for CIMA are different, I understand, from ICAS/ICAEW.

This comes up a lot as you know and it seems that few people actually understand the rules of the institutes they studied so long and hard to be members of.